ANALYSIS: Is any government now big enough to face out the banks?

For the last five years we have been told that busts in China would be avoided, because banks there have to do as they’re told. But foreign banks with bases in or links to the CPR don’t have to do what anyone says any more. So even though the Beijing government is desperate to get inflation under control, businessmen shut out by State-owned Chinese banks can borrow abroad…..especially property developers. Can you imagine a worse scenario than banks lending to property developers?

Well, the trend towards vast levels of bond-based borrowing from overseas banks is indeed being driven by Chinese property developers: they’ve  borrowed £11.2billion from international investors so far in 2011 – more than five times the amount they’d obtained by the same point last year, according to Dealogic. Estimates suggest that by July, the total will break the  $15.8bn sum Chinese companies raised from offshore bond sales during the whole of last year.

”It’s been a phenomenal start to the year for the China market,” Terence Chia of Citigroup  told the FT, “We expect this trend to continue.”

Except that Beijing is less keen on continuation.

“When they encounter a situation of real estate speculation the banks have the right not to lend,” Chinese regulation chief Liu Mingkang told an Asia bond forum two days ago. “It’s not that we don’t support housing as a sector – it’s a pillar industry, and many other industries rely on it. But we cannot allow it to develop in an unhealthy way.”
This is Mr Liu’s polite way of saying State bankers will be in deep trouble if they lend under such circumstances. But to stop unhealthiness, you have to read the same riot act to the property developers. And then face the consequences once the housing shortages get a grip again and the poor folks turn nasty. It’s no fun running an authoritarian dictatorship in a country of three billion people.
Does anyone in the Anglo-Saxon world have the balls to slap down mad bankers? I would say they might do – but they aren’t in evidence in either the British Parliamentary elite or among US Presidential hopefuls.
Although there will always be blokes in sandwich boards advertising the end of the world next weekend, equally the human race hates having to get its head round historic, irreversible change. But the era we’re experiencing at the moment really is a T-junction. ‘Crossroads’ is an overused term, but this isn’t one of those instances anyway: this is a four-lane one way street heading towards a choice between going one of two ways. At this point in history’s traffic flow, I’d say that hardly anyone’s in the correct lane. Most folk haven’t even spotted the lane markings.
There is no political spectrum analogy meant when I say that we can turn left towards Big, ruthless, crooked, controlling and unnatural; or right towards a manageable, creative, self-disciplined acceptance of reality. The people with the wherewithal to steer us towards the right turn do exist here and there, but few are in politics – and none of them are in power. The people in power are those who insist that banking needs only a few tweaks, it’s just fine for a bunch of amoral clowns to be driving our televisual culture, black is white, this is Disneyland, and Jeremy Hunt is a sort of harmlessly enthusiastic Basil Brush.
While a large media conglomerate has spent much of the last forty years diluting our culture and corrupting public officials, equally global banks have emptied our Treasury, cheated our citizens, and blackmailed our leaders. Between them, they have created the greatest unwarranted wealth-gap since the pre-1789 regime of Bourbon France. One thing a great many British people – from the Guardian teacher to the Telegraph colonel – ought to be able to accept is that far from being extreme, those lines is a fair empirical description of the last decade. We do at last, I think, have a common enemy-set.
The enemies of this site are the enemies of anyone who is balanced, intelligent and awake. They would include unaccountable clique government, greedy legislators, privileged civil servants, multinational tax avoiders, billionaire cybermen, over-confident investment bankers, fundamentalist religion, corrupt police officers, judicial secrecy, supranationalism, bad science, spooks, zealots, and anyone who craves money and power for their own sake.
It is of course easy to produce a paragraph of ethical box-ticking like that, if only because every decent citizen ought to be able to say yes, we don’t want any of those thank you very much. But the sad truth is that our society is riddled with all of them – and the overwhelming majority don’t seem to care either way about it. Even worse – while nine people in ten are apathetic, the remaining 10% of wonks are bitterly divided about how to tackle the problem. No wonder Bob Diamond wears a quiet smile most of the time.
But the open-minded know there really is no need for division. “Set the People free,” said Winston Churchill. “The purpose of power is to give it back,” said Aneurin Bevan. The only genuine thing dividing these two men was their rank at birth. None of us should be able to use that excuse in 2011.